R & D in Israeli industry

This paper deals with several aspects of R & D activity in Israel's manufacturing industries on three levels - the economy, industrial branch and the firm. Relative to other industrial countries, Israel is characterized by a high share of R & D expenditure in GNP but a low level of industrial R & D. If we take registered patents as an indicator of R & D output no significant correlation is found between this measure and expenditure on R & D; this may point to a low level of success or to the nature of R & D being directed more to small improvements of existing products and processes than to new inventions. An inter-industry analysis shows that R & D expenditure is positively correlated with average firm size and capital per employee and negatively correlated with concentration ratio. A positive correlation was also found with respect to increase in sales and export per employee but not with the rate of growth of export. Although most R & D is performed by large companies there is no significant correlation between R & D expenditure and firm's size among firms engaged in R & D, nor between R & D expenditure and firm's profitability. Concerning the relationship between domestic R & D and imports of technology a tentative conclusion is that Israel does not derive sufficient benefit from the international stock of knowledge.